10 April 2011

Libya: cash, fuel and food running short in Benghazi

As the Libyan conflict enters its eighth week, Benghazi's inhabitants are growing increasingly worried about their city grinding to a halt.By Nick Meo, Benghazi 6:00AM BST 10 Apr 2011

By now, Doctor Ahmed El Ojeli thought he would be working for a new, free Libya, and Muammar Gaddafi would be a bad memory.

Instead, on Friday he buried his student Salah Al Awamy, a medic who had died the previous day in a disastrous Nato "friendly fire" airstrike against a rebel tank column.

"I really didn't think our revolution would take this long, or be so bloody," Dr Ojeli said at Friday prayers, held on Benghazi seafront. "But now we think our struggle could go on for a long time yet and there will be many more dead."

He attended with other doctors before heading to the city's cemetery, where dozens of rebels were buried last week. Nobody is sure how many in total have been killed in Libya's eight-week uprising. Iman Boughaghis, a rebel spokeswoman, said the estimated figure for their supporters who have died is around 15,000.

Like almost everyone else in Benghazi, Dr Ojeli expected to overthrow the dictator quickly when he joined the rebellion against Muammar Gaddafi's rule in February. Instead, the rebel army is unable to make progress, the Gaddafi family has stubbornly hung on to power, and weeks are stretching into months.

As hopes of a rapid victory fade and military problems mount, the law professors and CEOs who struggled to set up a temporary administration in Benghazi from scratch are faced with serious new problems; their thrown-together administration is starting to look more permanent.

Their most acute problem is money – the governor of the Central Bank in Benghazi has warned all the cash in the city's banks will run out in just over a week's time. Their oilfields are being attacked by Col Gaddafi and infrastructure destroyed, and Benghazi is starting to look more and more dilapidated because essential services have more or less ground to a halt.

The streets are strewn with uncollected rubbish, many businesses are still shut, and there are power cuts for a couple of hours daily.

Only an emergency shipment of gas from Qatar averted a complete power shutdown, and many petrol stations cannot obtain fuel, in one of the world's principal petroleum-exporting nations.

But the looming problems are potentially even more serious.

Ahmed Ben Moussa, head of the National Transitional Council's humanitarian aid committee, said Benghazi was running out of essential foodstuffs including pasta, cheese, tuna, milk and children's food.

Although the city's port was still working and lorries can cross the Egyptian border unhindered, the value of the Libyan Dinar has slumped at the same time as insurance costs and shipping fees have rocketed, causing prices of staples such as pasta to double in the past fortnight.

At the same time families are short of cash to pay the bills - huge numbers of workers have received no salaries from companies based in Tripoli.

"I can see a humanitarian crisis coming and the minute people starve they will raise Gaddafi's green flag," Mr Ben Moussa said.

"Morale is still good and people are ready to die for the revolution – but they are not ready to see their children die for it. We have a few weeks' supply of staple food supplies, but it is not looking good and I am getting worried."

One of the biggest headaches for the NTC is getting Libyan banks functioning again. They have been affected by UN sanctions aimed at the Gaddafi regime, so branches based in Benghazi cannot get credit with foreign banks or obtain dollars.

"Trade and the economy have ground to a halt," Mr Ben Moussa said.

Last week the Transitional Council was thrown a financial lifeline when an oil tanker docked at Tobruk, picking up one million barrels of oil worth an estimated £77 million. The money will pay for food, salaries, and probably weapons. Free Libya's friends in Qatar will help them market the oil, and more tankers are expected to start calling soon.

The potential is fantastic as much of Libya's oil infrastructure, and many of the oilfields, are in the eastern half of the country where the rebels are strongest.

But output is only about a quarter the normal level - and many of the pipelines in the region run not to Tobruk, but to Ras Lanuf, the small oil terminal town that has changed hands repeatedly after fierce fighting in the last few weeks and is no longer in rebel control.

Col Gaddafi's military strategy now seems to be based on overrunning oil fields, or at least wrecking the infrastructure that services them.

Meanwhile the rebels are pressing for some of the billions of Gadddafi's dollars frozen abroad to be released and passed to them. There are £30 billion frozen in Britain and America alone - but doing so is legally complicated and will take time.

The damage the rebellion has done to the economy is clear in the city's half-mile long souk, where shops sell spices from the Sahara and cheap clothes imported from China.

"We reopened our shop because the National Council asked us to, but there are no customers and we don't really feel very comfortable about it," said Abdullah Mohammed, 35, who sells wedding dresses. Some jewellers had removed all the stock from their window out of fear of robbers.

Mr Mohammed said he was very hopeful about the long-term economic future of Libya; it was getting through the next few weeks that worried him.

Most of his customers have postponed their weddings, such as Iman, a young woman who was due to marry in a fortnight's time.

"Unless Gaddafi goes in the next week we will have to change the date," her mother said, as she made a last-minute inspection of the wedding dress. She would not give her name because she said she came from a prominent Benghazi family which could be targeted by Gaddafi supporters – an indication that fear has not quite been banished from the city.

"If this fighting is still going on, nobody will come. We want to a hold a proper wedding when he has gone – it will be a revolutionary wedding, celebrating our revolution and our daughter's future!"

One trader at least was making a fortune out of the current turmoil. Mohammed Kaplan's jewellery shop was one of the few that was crowded.

"The rich are buying gold bars, and the poor and middle class are selling their jewellery so they can eat," he said. "Our banks can't get any dollars, so gold is what people are changing their dinars into."

He has enjoyed a lucrative trade in currency as well. The black market price of dollars goes up each time Gaddafi's forces menace Benghazi, reaching 1.90 dinars per dollar when his tanks threatened to attack the town. At the beginning of last week the rate was 1.75, compared to the official rate of 1.25. It surged again as rebels were driven back at the week's end as those of a nervous disposition planned to escape to Egypt, or at least keep their money in a safe currency.

For ordinary people the excitement of the uprising has worn off and daily life has become more difficult, with nervousness at the steady stream of bad news from the battlefront.

Housewife Linda Sloss, who is originally from Norwich but has lived in Benghazi for almost 20 years, said the city is still solidly behind the rebels.

"We have a really good future now in Libya when he goes, but we are still scared. Gaddafi is blowing up oil rigs and we still don't feel safe. Nato isn't doing its job properly and the people in Misrata are still being massacred."

Her son's university has been shut for weeks and he spends every night sitting outside the family home armed with a pistol in case of thieves - in one of the city's better-off suburbs. Only in the past week have a few policemen appeared again on the streets.

Her husband, an aeronautical engineer, has not worked – or been paid – since the uprising started, because the airport is closed.

They are well-off enough not to have suffered much so far, but she said neighbours and friends without savings were in real need.

"Luckily people are pulling together and helping each other. There's a real blitz spirit here," she said. "We can only hope that will help us keep going, whatever the hardships ahead."